Reporting and Classifications of Non-profit Organizations

Not-for-profit organizations consist of a variety of organizations such as churches, education, health, social services, commerce, and clubs through schools whether it is a high school or a college. The difference between a not-for-profit organization and for-profit organizations is for-profit organizations generate profits for their owners and not-for-profit organizations exist to pursue missions that address the needs of society. Net assets are an important source of information for funders and investors externally and for board members and management internally to assess the financial health of a private, not-for private organization. Under the FASB requirements, private, not-for-profit Colleges and Universities are required to report net assets just as any other not-for-profit organizations. This paper will be focusing on the proper statements that are used for reporting for each classification along with examples of each statement and classification. There are three classif ication categories that are to be used when reporting; unrestricted, temporarily restricted and permanently restricted. The following is a description of each classification: †¢ Unrestricted - The part of net assets of an organization that is neither permanently restricted nor temporarily restricted by donor-imposed stipulations. †¢ Temporarily restricted - Temporarily restricted assets are those that are donated subject to restrictions that are limited to a specific period of time. 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